Republicans Are Responsible for Heightened Fiscal Uncertainty

December 5, 2014

On Wednesday in the New York Times, Jonathan Weisman offered a gloomy forecast for the year ahead in Washington and its potential effects on the economy. “[A] dark cloud is threatening to return to otherwise clearing economic skies: fiscal and policy uncertainty,” he writes. Weisman cites a number of legislative deadlines that Congress faces next year. But those deadlines aren’t what’s causing this return of fiscal uncertainty. That blame falls squarely on the Republican Party.

To understand this, just read Weisman’s article and look at the legislation that will require Congressional action in 2015—postponing or eliminating the automatic cuts to Medicare physician payments (the so-called doc fix) in March; replenishing the highway trust fund in May; renewing funding for the Export-Import bank in June; reauthorizing the Children’s Health Insurance Program in September; and renewing the tax extenders at the end of the year. The debt ceiling will also need to be raised sometime late next summer, further spending cuts from sequestration will kick in and both parties will have to agree on a government budget for the 2016 fiscal year. Sounds like a lot, right? It is—but it’s not a lot more than Congress faced this year.

In fact, many of the issues requiring Congressional action next year were on the agenda this year, as well. They passed a debt ceiling increase in February, a dox-fix in March, a patch for the highway trust fund in July, and an extension to the Ex-Im bank in September. In the next few days, they will likely pass an extension of the tax extenders and an omnibus bill that funds most of the government for the remainder of the 2015 fiscal year. The only real legislative deadline in 2015 that didn’t also exist in 2014 is the expiration of the Children’s Health Insurance Program. But Congress faced other deadlines this year as well, like the farm bill, which don’t come up next year. In other words, 2015’s legislative deadlines aren’t any more worrisome than 2014’s.

So why has fiscal and policy uncertainty returned? Part of the reason is that Congress already kicked the can down the road with the highway trust fund and Export-Import bank. Can they really do that again? (Yes, but it might be harder to do so.) More importantly, Republicans, reinvigorated by their midterm victories and emboldened by President Obama’s executive action on immigration, are intent on using budget bills to challenge the president’s authority. That’s exactly what’s happening with the government funding bill for the 2015 fiscal year. Republicans are coalescing around a proposal to fund most of the government through September, with the exception of the Department of Homeland Security which would be funded until February. That would set up a smaller showdown between Republicans and Obama, but a showdown nonetheless.

It’s hard to predict whether they will use the same, or more dangerous, tactics with the government funding bill for the 2016 fiscal year or legislation to raise the debt ceiling. But the risk that they do so is much larger than at any point this year. Don’t blame the legislative schedule for that. Blame the GOP.

OBAMACARE: Trent Lott—yes, that Trent Lott—urged Republicans to work on a technical fix to the Affordable Care Act, clarifying the ambiguity that, depending on the Supreme Court, could stop tax credits from flowing in three dozen states. (Steve Benen, MSNBC)

IMMIGRATION: The House passed an immigration bill that even Republicans admit is “symbolic.” Leaders are hoping it quiets conservatives lobbying for another government shutdown. (Seung Min Kim, Politico)

CLIMATE: Hillary Clinton’s recent comments on climate change suggest she plans to make it a major issue in 2016. (Greg Sargent, The Plum Line)

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